Japan finance minister to quit in blow to PM Aso

Japanese Finance Minister Shoichi Nakagawa said on Tuesday he would resign after being forced to deny he was drunk at a G7 news conference, dealing a fresh blow to unpopular Prime Minister Taro Aso in an election year.

But Nakagawa’s offer to quit after Parliament passed budget Bills—a process that could take weeks—failed to satisfy the government’s junior coalition partner and an emboldened opposition, which both demanded he quit immediately.

Aso was leaning towards appointing Economics Minister Kaoru Yosano to succeed Nakagawa, Japan’s Kyodo news agency reported.

But analysts said the political stalemate would drag on and raise questions over what was being done to lift Japan out of its worst economic slump since the 1974 global oil crisis.

The fuss over Nakagawa’s behaviour at the G7 news conference comes as Aso’s public support is plummeting—below 10% in one recent survey—ahead of an election that must be held no later than October.

“It’s extremely damaging politically for Aso. Nakagawa is saying he will quit after the budget and related Bills pass Parliament but, I’m not sure whether the Cabinet itself would last that long. Aso might be forced to quit before that,” said Koichi Haji, chief economist at NLI Research Institute.

“With Nakagawa quitting, the government lacks a person in charge to come up with further steps to support an economy that is worsening sharply.”

Kyodo said Economics Minister Yosano (70) would keep his current post and also take over Nakagawa’s other portfolio in charge of banking supervision.
Yosano came second after Aso in a leadership race for the ruling Liberal Democratic Party (LDP) in September, and has since been a linchpin of the administration.

Pressure grew on Aso to fire Nakagawa immediately.

The government’s junior partner, the New Komeito Party, wanted Nakagawa to resign immediately, Japanese broadcaster NHK said. The support of New Komeito is vital for the coalition to keep its two-thirds majority in Parliament’s lower house.

Opposition Democratic Party of Japan (DPJ) executive Kenji Yamaoka said Nakagawa should quit now. Opposition parties later submitted a censure motion against Nakagawa to the upper house, which the opposition controls. Such motions are non-binding.

‘Careless health management’
Nakagawa said he would resign after budget legislation was passed by the lower house, although the exact timing of his departure was unclear.

“I have caused trouble to the people,” Nakagawa told a news conference where he announced his resignation. “I apologise for causing commotion from my careless health management.”

At the Group of Seven news conference in Rome, Nakagawa slurred his words and appeared to fall asleep at one point.

He says he had not done more than sip some wine before the news conference and cold medicine had affected his behaviour.

Aso is trying to pass an extra budget for the fiscal year ending on March 31 as well as a record ¥88,5- trillion ($965-billion) budget for the year to March 2010 to help stimulate the economy, now sinking deeper into recession.

Aso had asked his close ally Nakagawa to stay in his post on Monday, a move that had backfired, analysts said.

“Aso thought he could help Nakagawa, and his initial reaction added misjudgment to the terrible humiliation. It’s going to further undermine Aso’s credibility,” said Sophia University professor Koichi Nakano.

Media polls show the Democrats have a good shot at ousting Aso’s LDP this year, ending more than 50 years of almost unbroken rule.

About the only bit of good news for Aso was an invitation to meet new United States President Barack Obama in Washington on February 24.

Visiting US Secretary of State Hillary Clinton said it would make Aso the first foreign leader to meet Obama at the White House. Aso had accepted, Japanese officials said.

One budget-related bill is stuck in the upper house while the budget for the 2009/10 fiscal year, which starts on April 1, is being debated in the lower house.

Annual budgets typically are enacted by the end of March but this year’s could be stalled by the political fuss. - Reuters

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